This bill establishes a new, statutory process that requires the omnibus operating appropriations act to include a discretionary tax expenditure budget and creates multiple procedural and reporting rules governing such tax preferences. It defines "discretionary tax expenditure" as a tax preference that reduces revenues appropriated in the omnibus operating appropriations act, has no statutory expiration or was recommended by JLARC for review but not clarified by the legislature, and is not constitutionally or federally required. The budget must list each discretionary tax expenditure, include an estimated state revenue impact, and discretionary tax expenditures must have expirations no greater than ten years or be clarified pursuant to JLARC/citizen commission recommendation. The legislature may expire such expenditures earlier by majority vote, and any discretionary tax expenditure required to be submitted but omitted from the adopted omnibus appropriations act expires at the end of that calendar year. The bill also bars approval or reauthorization of new or existing discretionary tax expenditures for ten years after the effective date of the specified section (Sec. 3). The bill makes procedural changes to budgeting, reporting, and review: the Department of Revenue must prepare and post a discretionary tax expenditure report beginning December 1, 2025, then again December 1, 2026, and every two years thereafter, including revenue estimates and summaries of JLARC and citizen commission reviews. The governor must transmit a proposed discretionary tax expenditure budget and the Department of Revenue report with the governor’s operating budget and may recommend ending or continuing each listed expenditure that meets specified criteria (no expiration, JLARC review recommendation not yet acted on, or revenue impact above $50,000 per fiscal year/$100,000 per biennium). The bill requires JLARC to report findings to the citizen commission by July 30 of even-numbered years, requires the citizen commission to comment and the committee to produce a final report by September 30 of even-numbered years, and directs legislative fiscal committees to hold public hearings. It also assigns duties to the state budget outlook work group and amends capital budget document content and OFM deadlines and instructions for agency budget submissions. Legally, the act is primarily a set of procedural and transparency reforms: it creates new reporting and budgeting duties, amends several RCWs, adds new sections to chapter 43.88 RCW and chapter 82.32 RCW, and imposes review, audit, and scheduling requirements on JLARC, the citizen commission, OFM, and the Department of Revenue. It includes a severability clause, a short title ("tax exemption transparency and accountability act"), and directs the Department of Revenue and Office of the Code Reviser to draft technical corrections for submission by December 31, 2025. Important details are missing from the provided text: the full content of the referenced section 5, some truncated definitions and statutory amendments, and any effective date(s) for the act or its sections.

If enacted, the bill would force the governor and Legislature to treat many tax breaks like line items in the operating budget: the Department of Revenue must produce a recurring report estimating the revenue impact of each “discretionary” tax preference, the governor must include a discretionary tax expenditure budget and recommend whether each listed preference should continue, and the Legislature must include that budget in the omnibus operating bill or the omitted tax breaks automatically expire at year-end. Tax preferences that have no expiration, are above modest revenue thresholds ($50,000/year or $100,000/biennium), or were flagged by JLARC would need clear reauthorization terms (generally a sunset of 10 years or sooner) and be subject to JLARC and a citizen commission review schedule; the Legislature is also blocked from approving new or reauthorizing existing discretionary tax expenditures for ten years after the specified section’s effective date. The direct winners and losers would be state budget officials and oversight bodies, taxpayers and entities that currently receive tax preferences, and agencies that rely on those preferences. The Department of Revenue, OFM, JLARC and the citizen commission will take on new reporting, review, and posting duties and thus face added workload and likely administrative cost; the governor and legislative fiscal committees must hold hearings and incorporate findings into budget decisions. Recipients of discretionary tax breaks face greater risk that benefits will be shortened or ended unless explicitly reauthorized in the omnibus budget, creating more uncertainty for program planning and revenue forecasting. Some important implementation details — including the full content of the referenced section 5, exact effective dates, and the full text of other RCW amendments — are not included here, so timing and some procedural steps remain unclear.